DEALBOOK; Marion O. Sandler, 81, Banker and Philanthropist, Dies

By MICHAEL J. DE LA MERCED

Published: June 5, 2012

Marion O. Sandler, who with her husband transformed a two-office bank into one of the biggest savings and loan firms in the country, Golden West Financial, only to be accused of contributing to the financial crisis when they sold it to Wachovia in 2006, died on Friday at her home in San Francisco. She was 81.

The Sandler Foundation, a charitable organization that she and her husband,Herbert Sandler, had set up, announced her death but did not give a cause.

Herbert and Marion Sandler started Golden West as a small operation in Oakland, Calif., in 1963. Over the next 43 years it grew to become a giant lender, with $124 billion in assets and 285 savings branches across the country at its peak.

Selling Golden West to Wachovia for more than $25 billion was meant to be the crowning business achievement for the Sandlers, who reaped about $2.4 billion from the transaction. They poured much of their proceeds into the Sandler Foundation, which became one the biggest benefactors to nonprofits in the country. The investigative journalism outfit ProPublica is one of its recipients.

But the acquisition proved disastrous for Wachovia, which began to founder from the enormous burden of home loans it had absorbed. In the depths of the financial crisis, the bank was sold to Wells Fargo in a deal encouraged by the federal government.

Blame for the mess was cast far and wide, but the Sandlers were among the most prominent targets, despite their protests that they had nothing to do with Wachovia's fall. ''Saturday Night Live'' lampooned them in October 2008 as ''people who should be shot.'' (NBC later removed the line from rebroadcasts of the skit and from its Web site, and the show's executive producer,Lorne Michaels, expressed regret, saying he had not realized the characters in the sketch were real people.) And Time magazine ranked the couple in its list of ''25 people to blame for the financial crisis.''

The Sandlers pushed back, pointing to their 43-year track record at Golden West. In a three-page rebuttal to the Time article, they wrote, ''Once the facts are known, it is just plain wrong to pin the blame on us.''

Marion Osher was born on Oct. 17, 1930, and grew up in Biddeford, Me., the youngest of five children born to Samuel and Leah Osher. It was a family heavily involved in both business and philanthropy.

She graduated from Wellesley College in 1952, earning Phi Beta Kappa distinction, and received a master's of business administration degree from New York University in 1958. She became a rarity of the time: a high-ranking woman on Wall Street, working as a banking analyst at Dominick & Dominick and then at Oppenheimer & Company, following savings and loan associations.

She met Herb Sandler, then a Manhattan lawyer, on a beach in the Hamptons in 1960. They married the next year, and moved to California to try running their own lending operation.

Supported by a bank loan, they purchased a savings and loan for $3.8 million and renamed it Golden West, with branches operating under the World Savings Bank name.

Mrs. Sandler, who liked to knit scarves during meetings, was seen as the marketing and consumer brains of the firm. Her husband, who survives her, was the strategist.

Mrs. Sandler was one of the first women to become a chief executive of a Fortune 500 company and one of the longest-serving.

Under the Sandlers, Golden West, showing limited mortgage losses, was praised as one of the best-run lenders in the United States. Unusually, the bank kept its loans on its books, rather than breaking them up and selling them to other investors, a practice known on Wall Street as securitization. To the Sandlers, securitization made for lazy lenders who did not scrutinize the mortgages they sold.

Yet the firm was unafraid of pioneering new forms of lending. Among them was the option-adjustable rate mortgage, or option-ARM. Introduced in the early 1980s, it allowed borrowers, temporarily, to make small monthly loan repayments that did not cover interest. Golden West eventually marketed the product, calling it Pick-a-Pay, to low-income customers who could afford the low initial payments but who risked being sunk when larger installments were demanded.

By the time of the Golden West sale in 2006, the Sandlers had already established themselves as philanthropists, giving to Human Rights Watch, the American Civil Liberties Union and other nonprofit organizations. They helped found the Center for Responsible Lending, which is devoted to protecting homeowners, and the Center for American Progress, a liberal research center.

The Wachovia deal provided the Sandlers with the capital to found ProPublica, whose investigative journalism appears both on its own site and in collaboration with other news organizations, among them The New York Times. All told, the couple donated more than $550 million and publicly committed to donating most of their wealth as part of the Giving Pledge, a philanthropy campaign thatWarren E. Buffett andBill Gates helped organize.

But Wachovia's near demise cast a long shadow on the Sandlers' reputation. Jeered at as an expensive folly, the Golden West acquisition came at the height of the housing boom. But after the financial crisis hit, Wachovia found itself struggling under the weight of mortgages that had quickly soured, including loans picked up from Golden West. Wachovia said in late 2008 that it expected to lose $26.1 billion on a portfolio of Golden West loans worth some $124 billion.

Indeed, Wachovia was sold to Wells Fargo for $15.1 billion, 40 percent less than it had paid for Golden West alone.

Besides her husband, Mrs. Sandler is survived by her brothers, Bernard and Harold Osher; her daughter, Susan; her son, James; and two grandchildren.

This is a more complete version of the story than the one that appeared in print.

PHOTO: Marion and Herbert Sandler in 1990. They sold Golden West Financial to to Wachovia in 2006. (PHOTOGRAPH BY TERRENCE MCCARTHY)